Question

Prather Company owns 80% of the common stock of Stone Company. The stock was purchased for $960,000 on January 1, 2009, when Stone Company's retained earnings were $675,000. On January 1, 2011, Stone Company sold fixed assets to Prather Company for $960,000; Stone Company had purchased these assets for $1,350,000 on January 1, 2001, at which time their es timated useful life was 25 years. The estimated remaining useful life to Prather Company on 1/1/11 is 10 years. Both companies employ the straight-line method of depreciation.
The financial data for 2012 are presented here:



Required:
A. Prepare a consolidated statements workpaper for the year ended December 31, 2012.
B. Calculate consolidated retained earnings on December 31, 2012, using an analytical or t-accountapproach.


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  • CreatedMarch 13, 2015
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